Is This Article In The Public Interest? – Chesterton explained

July 12, 2017

The long-awaited Court of Appeal judgment in Chesterton Global Ltd and Another v. Nurmohamed and Another is finally out, a mere 27 months after the EAT’s ruling somewhat emasculated the intended Parkins v. Sodexho reversal of the public interest test under s.43B of the Employment Rights Act 1996.  Its guidance is, at best, intentionally fuzzy, as Jason Braier explains.

Facts and History

As a reminder, Chesterton is a firm of estate agents.  Mr Nurmohamed was employed as manager of its Mayfair office.  When a new group of investors came on board at the company, there was a review of the commission system for sales staff, moving from a revenue-based calculation to one linked substantially to achievement of budgeted profits.  Mr Nurmohamed raised concerns with the London-area director and HR director that discrepancies in the monthly internal accounts showed profit was being suppressed artificially to reduce the level of compensation.  The ET found he told the London-area director this affected commission for over 100 senior managers and that the suppression was between £2-3million of profit.  It held the disclosure to be in the interest of the 100 senior managers, and that that was a sufficient group to amount to being a matter in the public interest.  The EAT upheld that decision.

Court of Appeal Decision

The Court of Appeal upheld the ET’s decision, finding either no error of law or that any error was immaterial.  It’s helpful to look at the analysis of the law before considering why the Court reached that view.

The lead judgment is given by Underhill LJ.  In explaining the legislative history – and specifically the intention to reverse the effect of Parkins v. Sodexho Ltd [2002] IRLR 109, where it had been held that under the old legislative provisions raising a breach of one’s own employment contract could amount to a protected disclosure – Underhill LJ highlighted the statements of Lord Borrie (the sponsor of the Enterprise and Regulatory Reform Bill) that distinguished purely private/personal interests from public interests [see paras 12-13].

To set the scene for the decision which followed, Underhill LJ set out a number of preliminary statements about the requirement under s.43B.  Of particular importance, he noted that whilst the worker had to believe the disclosure was in the public interest at the time he made it, the reasonableness of that belief can rely on ex post facto justification that was not in his head at the time of the disclosure.  As reasonableness is to be objectively analysed, the tribunal can find a belief reasonable on grounds different from those articulated by the claimant [see paras 27-29].  He also held the public interest did not have to be the predominant motive in making the disclosure – otherwise the 25% bad faith reduction under ERA ss.49(6A) and 123(6A) would have no role to play [para 30].

Test and Some Thoughts

Three distinct sets of submissions were made on the extensiveness of the public interest necessary for a disclosure to qualify.  The Appellants submitted public interest required the interests served to extend outside the workplace [para 32].  The intervener submitted it should include all disclosures that are in the interests of anyone else besides the worker making the disclosure [para 33].  The Claimant took a position between the two, suggesting the following factors to be of particular importance [para 34]:

  • The numbers in the group whose interests the disclosure served;
  • The nature of the interests affected and the extent they are affected by the wrongdoing (the more important the interest, the more likely disclosure is in the public interest, and vice versa);
  • The nature of the wrongdoing disclosed – disclosure of deliberate wrongdoing being more likely to be in the public interest than inadvertent; and
  • The identity of the alleged wrongdoer – the larger/more prominent the wrongdoer, the more likely disclosure is in the public interest.

The Court rejected the submissions from the Appellant and intervener, whilst considering the Claimant’s factors a ‘useful tool’ in answering the question on a consideration of all the circumstances in the case [paras 37, 44, 45].  The Court thus declined to set out any bright line rule, preferring a principally fuzzy, nebulous approach that leaves the question of reasonableness very much at the Tribunal’s discretion.  Questions of reasonableness of belief that disclosure is in the public interest will thus need to be determined on a case-by-case basis, with the Claimant looking to accentuate, and the Respondent looking to downplay, the importance of the disclosure.

Whilst no bright line is set out by the Court of Appeal, it appears to have raised the ‘public interest’ bar from the level at which the EAT set it.  It is unlikely that the public interest test would now be passed in some of the cases where appellants relied successfully on the EAT decision in Chesterton, such as Underwood v. Wincanton plc (UKEAT/0163/15) – where the disclosure was about the allocation of driver overtime at a single depot – or Morgan v. Royal Mencap Society [2016] IRLR 428 – where the disclosure was about Mrs Morgan’s cramped working conditions causing her a knee injury.